Six years ago, Mexico was the world’s ninth largest exporter of cars. Today the country is ranked fourth—behind Germany, Japan and South Korea—with exports expected to total more than 2.14 million vehicles this year.
One in 10 cars sold last year in the U.S. was made in Mexico. Next year, every new taxi in New York’s fleet—made by Nissan Motor Co.—will carry the “Hecho en Mexico” label. Mexico is now exporting vehicles to China, and even helped Japan keep up with orders after last year’s tsunami.
“Mexico is extremely competitive,” Carlos Ghosn, Nissan’s chief executive, said in an interview. Plants in Mexico operate more hours a year than other Nissan facilities world-wide. “You can run your plants with practically no limits if you want,” he said.
Cars have been manufactured cheaply in Mexico for decades, thanks to low wages (about $3 per hour) and proximity to the U.S. market. But the Mexican car industry has since developed another advantage: The efficiency of some of its factories is now on par with Japanese plants.
The country’s productivity has set new industry benchmarks. Nissan’s Aguascalientes plant, for example, experimented with a new production scheme that allowed the plant to operate 23 hours a day, six days a week. Studies conducted by Nissan of its Mexican-made compact car Versa showed a quality level equal to cars from its plant in Oppama, Japan.
International auto-parts suppliers are also setting up shop near the factories, and the drug cartels have left them alone thus far. Let’s hope they continue to operate in peace. A stable, prosperous Mexico where there might have been a failed narco-state is very much in America’s interests, especially as the two countries become ever-more intertwined.